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Frisco Home Freedom and Individualism

When you rent, you are normally limited on what you can do to improve your home. You have to get permission to make certain types of improvements. Nor does it make sense to spend thousand of dollars painting, putting in carpet, tile or window coverings when the main person who benefits is the landlord and not you.

Since your landlord wants to keep his expenses to a minimum, he or she will probably not be spending much to improve the place, either.

When you own a home, however, you can do pretty much whatever you want. You get the benefits of any improvements you make, plus you get to live in an environment you have created, not some faceless landlord.

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This week in Frisco Real Estate

Last Tuesday’s S&P Case-Shiller home price index reported that homes in 20 major U.S. cities were WORTH MORE in February 2010 than they were in February 2009 — the first year-to-year INCREASE in values in over three years! The good news of this 0.6% annual gain was tempered by a small monthly decline in prices from January to February. But remember, February’s unusually stormy weather make it a tough month for real estate in much of the country.

Corroborating Case-Shiller, a second home price index also showed a national gain in home prices for February 2010 compared to February 2009. This was the First American CoreLogic HPI, an index including distressed sales, which reported a home price increase of 0.3% for the year.

>> Review of Last Week

IT’S ALL GREEK TO WALL STREET… The stock market ended down after a volatile week whose off-putting news ranged from Greece to Washington to the Gulf of Mexico. Greek bonds were downgraded to junk, while Portugal and Spain got downgrades too. Goldman Sachs execs were grilled in Washington, then Friday came news of a federal criminal probe into the firm. Finally, energy stocks got hammered following a terrible oil spill in the Gulf of Mexico.

In spite of these unfortunate events, the economy continued to offer up signs of recovery. On Tuesday, following the Case-Shiller annual home price INCREASE reported above, we got a big boost in the Conference Board’s consumer confidence number for April. The 57.9 reading put it at its highest level since August 2008. The week ended with a great Chicago PMI measure of Midwest manufacturing. Then Advanced Q1 GDP came in UP 3.2%, marking the third straight quarter of economic growth, with that all-important consumer spending UP 3.6%!

Things weren’t too shabby on the corporate earnings front either. Of the 170 S&P 500 companies reporting Q1 results, 130 of them beat earnings-per-share estimates. Even better, 106 of these companies topped revenue expectations, showing that strong earnings performance didn’t just come from belt-tightening.

For the week, the Dow ended down 1.7%, to 11008.61; the S&P 500 was down 2.5%, to 1186.69; and the Nasdaq was off 2.7%, to 2461.19.

Down-sliding stocks and off-putting news at home and abroad sent investors scurrying to bonds which sent prices up even after Friday’s positive economic reads. The FNMA 30-year 4.5% bond we watch closed UP 75 basis points for the week, ending at $100.84. National average mortgage rates are holding steady, still at historically low levels, according to Freddie Mac’s weekly survey.

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Forced Savings With Frisco Real Estate

 Some people are just lousy at saving money, and a house in Frisco is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates.

Second, your Frisco home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments.

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Stable Monthly Housing Costs in Frisco

When you rent a place to live, you can certainly expect your rent to increase each year – or even more often. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage – and interest rates aren’t as volatile now as they were in the late seventies and early eighties.

Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense?

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Frisco Foreclosure Income Tax Savings

Because of income tax deductions, the government is basically subsidizing your purchase of a Frisco home. All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

For example, assume your initial loan balance is $150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest. If your first payment is January 1^st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

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This Week In Frisco Real Estate

The week ended on the most dramatically impressive new home sales numbers in 47 years. March’s 26.9% increase was the biggest monthly sales gain since 1963, taking us to a 411,000 annual rate! Supply dropped to 6.7 months, inventories fell to 228,000 and the median price went to $214,000, up 4.3% versus last year. Some put the sales surge to the soon-to-expire tax credit, but the facts remain that the economy IS recovering and homes ARE substantially more affordable!

The day before, March existing home sales came in UP 6.8% at a 5.35 million annual rate, UP 16.1% from a year ago, with all regions showing gains! The existing home median price went to $170,700, UP 0.4% from a year ago. These good numbers reversed a three-month slide and sent the supply of existing homes down to 8.0 months.

On April 22, the EPA’s new lead paint renovation rules went into effect. These require contractors who are disturbing lead-based paint in homes built before 1978 to hire certified renovators working for a certified renovator firm using lead-safe work practices. Realtors need to advise sellers to use certified professionals to fix up a home and to make sure it’s safe for buyers to move into a home that’s been renovated. The real estate disclosure must include any tests for the presence of lead paint and any dust wipe testing done after lead paint’s been disturbed. Property managers with pre-1978 homes must also hire certified renovators. Find more info at http://www.realtor.org/government_affairs/lead_paint_main. Or visit the EPA at http://www.epa.gov/lead/pubs/renovation.htm.

Review of Last Week

RALLY CAPS BACK ON… After the prior week’s flat stock market performance due to the Goldman Sachs-SEC troubles at the end, this week saw investors resume their 13-month-long market rally. The Dow is now firmly in 11,000 territory, the S&P 500 passed the 1200 mark and the Nasdaq crossed over 2500.

First quarter corporate earnings certainly fueled the enthusiasm. Most of the 85 S&P 500 companies reporting beat both profit AND revenue expectations, meaning the good numbers weren’t just from belt-tightening. Big stars included Amazon.com, American Express, Apple, Citigroup, IBM, McDonald’s, Microsoft, SanDisk, Starbucks and UnitedHealth, all with nice Q1 earnings.

The Leading Economic Indicators (LEI) index registered its twelfth consecutive monthly gain, up 1.4% in March. The Producer Price Index (PPI) put wholesale inflation up 0.7% for March, but Core PPI, excluding volatile food and energy, was up only 0.1% for the month and 0.9% for the year. New weekly unemployment claims were down 24,000, while continuing claims dropped by 40,000. Excluding volatile transportation, Durable Goods orders were up 2.8% for the month and up 13.5% over a year ago.

For the week, the Dow ended UP 1.7%, to 11204.28; the S&P 500 was UP 2.1%, to 1217.28; while the Nasdaq went UP 2.0%, to 2530.15.

Last week’s improved economic data, along with Greece’s move away from disaster, hurt bond prices, which tend to benefit from weak economic developments. Investors were also looking ahead to the huge levels of supply on offer this week. The FNMA 30-year 4.5% bond we watch closed down 41 basis points for the week, at $100.09. As reported in Freddie Mac’s weekly survey, national average mortgage rates stayed flat, still at historically low levels!

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Benefits of Owning Your Own Frisco Home

As a fairly general rule, Frisco homes appreciate about five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could earn over six percent with the safest investment of all, treasury bonds.

But take a second look…

Presumably, if you bought a $200,000 house in Frisco, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual “return on investment” would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a Frisco home is higher than most any other investment you could make.

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March Home Sales In Frisco

The National Association of Realtors reported Thursday 

that U.S. existing-home sales rose 6.8 percent in March for the first time in three months.

Even though buyers seeking to take advantage of the Homebuyer Tax Credit have until April 30 to go under contract, closed transactions in March increased to an annualized rate of 5.35 million. 

“Sales have been higher than year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” said Lawrence Yun, NAR’s Chief Economist.

All 54 metro areas included in the AP-RE/MAX Monthly Housing Report showed positive growth in sales for March. Year-over-year, inventory was down 13.15 percent while prices increased by 7.76 percent.

 National Inventory:

1. March Inventory: 3.58M, +1.5% from February and -1.8% from March 2009
2. Months Supply: 8 months, down from 8.5 months in February. 

March Practitioner Survey:

1. Distressed properties made up 35% of all sales. (unchanged)
2. First-time buyers purchased 44%  of all homes sold. (up from 42% in Feb)
3. Investors accounted for 19% of all transactions. (unchanged)

Frisco Homes Sold

There were 6,324 Frisco homes sold in March

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Protesting Your Frisco Property Taxes

May 31st is the deadline to file your Collin County tax protests. The collin County Central Appraisal District lists 9 reasons for filing a protest:

1. The proposed value of your property is too high

2. Your property was valued unequally compared with other property in the appraisal district

3. The chief appraiser denied an exemption

4. The chief appraiser denied an agricultural or timber appraisal for your land

5. The chief appraiser wrongly determine that you took your land out of agricultural or timber use

6. The appraisal records shows an incorrect owner

7. Your property is being taxed by the wrong taxing units

8. Your property is incorrectly included on the appraisal records

9. The chief appraiser or ARB failed to send you a notice that the law requires them to send

If your property falls into one of thes catagories go to : http://www.collincad.org/ for more information on the protest procedure.

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Frisco Foreclosures in May.

Collin County showed a noticeable drop in the numeber of may filings. Collin County dropped by 17 percent from the previous month and 9 percent from the same timeframe in 2009. Collin County still has more foreclosed homes on the auction block than the same time period in 2008, representing an increase of 31 percent.

Any good news is just that…Good News. This is only one month’s data so don’t start celebrating yet.

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